Publisher's note: Dmitry Orlov authored Reinventing Collapse, based on his firsthand observations of the collapse of the USSR and the socioeconomic prospects for the U.S. His new article describes the key physical, social, political and economic factors which energy industry analysts must take into account when forecasting oil production in order for their forecasts to be meaningful. Peak Oil is History is exclusively on CultureChange.org until November 1. - JL

The marketing blurb on the back cover of the first edition of my first book,
Reinventing Collapse, described me as "a leading Peak Oil theorist." When
I first saw it, my jaw dropped -- and remained hanging.
You see, if you run
through a list of bona fide leading Peak Oil theorists -- your Hubberts, your
Campbells, LaherrÃ¨res, Heinbergs, Simmonses and a few others worth
mentioning, you will not find a single Orlov among them. In vain would you
search the annals and conference proceedings of the Association for the
Study of Peak Oil for any trace of your humble author. But now that this
howler is in print and circulated in so many copies, I suppose I have no
choice but to try to live up to the expectation it set.

My disqualifications aside, now does seem to be an auspicious moment to hold forth with a new piece of Peak Oil theory, because this is the year when, for the first time, just about everyone is ready to admit that Peak Oil is real, in essence, though some are not quite ready to call it by that name. Just five years ago everyone from government officials to oil company executives treated Peak Oil theory as the work of a lunatic fringe, but now that conventional world oil production peaked in 2005, and all liquids world production peaked in 2008, everyone is ready to concede that there are serious problems with growing the global oil supply. And although some people still feel skittish about using the term Peak Oil (and a few experts still insist that the peak must be referred to as "an undulating plateau," which, if anything, is a graceful turn of phrase) the differences of opinion now largely stem from a refusal to accept the terminology of Peak Oil rather than the substance of peaking global oil production. This is, of course, quite understandable: it is awkward to suddenly jump from shouting "Peak Oil is bunk!" to shouting "Peak Oil is history!" in a single bound. Such acrobatics are only safe if you happen to be a politician or an economist.

Now that the matter has been largely settled, I feel that the time is ripe for me to weigh in on the subject and declare, unequivocally, that Peak Oil is indeed bunk. Not the part about global oil production reaching a peak sometime right around now then declining inexorably: that part seems true enough. Nor the part about oil production in any given province becoming constrained by geology and technology once the peak is reached: that part, under properly designed experimental conditions, seems predictive as well. In fact, the depletion model has been confirmed beautifully by the example of the continental United States minus Alaska since 1970. But the idea that this same depletion model can be applied to the planet as a whole, is, I feel, something that must be rejected as utterly and completely bogus. To see what I mean, look at a typical Peak Oil chart (Fig. 1) that shows global oil production climbing up to a peak and then declining.

Observe that the upward slope has a lot of interesting structure to it. There are world wars, depressions, imperial collapses, oil embargoes, discoveries of giant oil fields, not to mention the ugly boom and bust cycles that are the bane of capitalist economies (whereas socialist ones have sometimes been able to grow, stagnate and eventually collapse far more gracefully). It is a rugged slope, with cliffs and crevasses, craggy outcrops and steep inclines. Now look at the downward slope: is it not shockingly smooth? Its geologic origin must be completely different from that of the upward slope. It appears to be made up of a single giant moraine, piled to the angle of repose near the top, with some spreading at the base, no doubt due to erosion, with a gradual transition into what appears to be a gently sloping alluvial plain no doubt composed of silt from the runoff, which is then followed by a vast perfectly flat area, which might have been the bottom of an ancient sea. If climbing up to the peak must have required mountaineering techniques, the downward slope looks like it could be negotiated in bathroom slippers. One could do cartwheels all the way down, and be sure of not hitting anything sharp before gently rolling to a stop sometime around 2100. Mathematically, the upward slope would have to be characterized by some high-order polynomial, whereas the downward slope is just e-t with a little bit of statistical noise. This, you must agree, is extremely suspicious: a natural phenomenon of great complexity that, just when it is forced to stop growing, turns around and becomes as simple as a pile of dirt. Where else have we observed this sort of spontaneous and sudden simplification of a complex, dynamic process? Physical death is sometimes preceded by slow decay, but sooner or later most living things go from living to dead in an abrupt transition. They don't shrivel continuously for decades on end, eventually becoming too small to be observable. And so I like to call this generic and widely accepted Peak Oil case the Rosy Scenario. It's the one in which industrial civilization, instead of keeling over promptly, joins an imaginary retirement community and spends its golden years tethered to a phantom oxygen tank and a phantom colostomy bag.

The really odd thing is that the Rosy Scenario can be quite accurate, under ideal circumstances, when applied to individual countries and oil-producing regions. For instance, suppose one of the world's largest oil producers, which started out with more oil than Saudi Arabia, reaches Peak Oil in, say, 1970, but then promptly goes off the gold standard, foists its paper currency on the rest of the world by backing it up with the threat of force including the possibility of a nuclear first strike, eventually comes to import over 60% of its petroleum, much of it on credit, and, a few decades later, goes bankrupt. Then, over the intervening decades, its domestic oil production would indeed exhibit this wonderfully gentle geologically and technologically constrained curve -- up to the point of national bankruptcy.

Past the point of national bankruptcy circumstances are bound to become decidedly non-ideal, but the implications of this remain unclear. Will that hapless country still be able continue borrowing money internationally in order to import enough oil to keep its economy functioning, and, if so, under what terms, and for how much longer? It would be nice to know how this story ends ahead of time, but unfortunately all we can do is wait and see.

But we do have another example (Fig. 3), which may offer some insights into what we mean when we say that circumstances will be ânon-ideal.â The country that is currently the world's largest oil producer reached Peak Oil around 1987. Its sclerotic, geriatric, ideologically hidebound, systemically corrupt leadership was unable to grasp the importance of this fact, and just three years later the country was bankrupt and, shortly thereafter, it dissolved politically. In this case, plummeting oil production became the country's leading economic indicator: it plummeted, then the GDP plummeted, then coal and natural gas production plummeted, and a decade later the economy was down 40%. Behind these numbers was a precipitous drop in life expectancy and a pervasive atmosphere of despair in which many lives were either lost or ruined.

But as long as no messy internal or external political or economic factors interfere with the natural depletion curve, the aprÃ¨s-Peak predictions of Peak Oil theory do seem to hold. (When I say âideal circumstances,â I suppose that I must mean circumstances that are ideal from the point of view of sentient though irrational hydrocarbon molecules, whose desire is to be pumped out of the ground and burned up as quickly and efficiently as possible, because it is unclear who else ultimately benefits, but let's not quibble.) Since the problem of not having enough oil to go around is known to cause all sorts of nasty political and economic problems, and since this is exactly the problem we should expect to encounter soon after the world reaches Peak Oil, the base assumption on which the predictions of Peak Oil theory for global oil production rest is not realistic. The specialists who are in a position to predict Peak Oil are not able to gauge its economic and political effects, and so all they can do is give us the Rosy Scenario as an ultimate upper bound. However, this caveat is not spelled out as clearly as it should be. The result is that we might as well be working with a theory which predicts that, once global Peak Oil is reached, delicious chocolate petits fours will spontaneously bake themselves into existence and fly into our mouths on dainty gossamer wings of marzipan.

The Peak Oil theory-based explanation is that while the upward slope is economically constrained, the downward slope is only constrained by the geology of depleting oil reservoirs and by oil extraction technology, which is subject to thermodynamic limits and cannot improve forever without encountering diminishing, then negative, returns. While the oil supply is growing, oil demand fluctuates, resulting in numerous ups and downs in production superimposed on the overall upward trend as production tries to match demand. But on the downward side, demand permanently exceeds supply, and so every barrel of oil that can be produced at each instant will be produced.

When extrapolating the aftermath of local oil production declines to global Peak Oil, the unstated assumption is that the global economy will continue to function with uncanny smoothness at the level of demand that can be met, while unmet demand will be cleanly washed off into the gutter by a strong, steady stream of economic and political nonsense. This will all sort itself out spontaneously with rational market participants responding to price signals and deciding at each instant whether they should:

A. continue consuming oil in the manner to which they have become accustomed, or

B. quietly wander off and die without calling attention to themselves or making a fuss.

Where else have we seen such flawless organization, in situations where a key commodity -- like, say, food, or drinking water -- becomes critically scarce? Anywhere? Anywhere at all?

Let us look at it another way. As I mentioned, Peak Oil theory has been quite good at predicting the depletion profile of certain stable and prosperous countries and provinces. But these predictions become meaningless when extrapolated to the world as a whole, for one very obvious reason: the world cannot import oil. Let me say it again, this time in title-case, bolded and centered, to emphasize the significance of this statement:

Planet Earth Can't Import Oil

When faced with insufficient domestic oil production, an industrialized country has but two choices:

1. Import oil

2. Collapse

But when faced with insufficient global oil production, an industrialized planet has just one choice: Choice Number 2.

Some might argue that there is a third choice: start using less oil right away. However, in practice this turns out to be equivalent to Choice Number 2. Using less oil involves making some radical, often technologically challenging, politically unpopular, and therefore expensive and time-consuming changes. These may be as technologically advanced (and unrealistic) as replacing the current motor vehicle fleet with electric battery-powered vehicles and a large number of nuclear power plants to recharge their batteries, or as simple (and quite realistic) as moving to a place that is within walking or bicycling distance from your work, growing most of your own food in a kitchen garden and a chicken coop, and so on. But whatever these steps are, they all require a certain amount of preparation and expense, and a time of crisis (such as when oil supplies suddenly run short) is a notoriously difficult time to launch into long-range planning activities. By the time the crisis arrives, either a country has already prepared as much as it could or wanted to (thereby delaying the onset of collapse) or it has not, bringing the crisis on sooner, and making it more severe. The oft-cited Hirsch Report states that it would take twenty years to prepare for Peak Oil in order to avoid a severe and prolonged shortage of transportation fuels, and so, given that the peak was back in 2005, we now have minus five years left to lollygag before we have to start preparing. According to Hirsch et al., we have failed to prepare already.

Some might also wonder why a shortage of oil should automatically trigger a collapse. It turns out that, in an industrialized economy, a drop in oil consumption precipitates a proportional drop in overall economic activity. Oil is the feedstock used to make the vast majority of transportation fuels -- which are used to move products and deliver services throughout the economy. In the US in particular, there is a very strong correlation between GDP and motor vehicle miles traveled. Thus, the US economy can be said to run on oil, in a rather direct and immediate way: less oil implies a smaller economy. At what point does the economy shrink so much that it can no longer meet its own maintenance requirements? In order to continue functioning, all sorts of infrastructure, plant and equipment must be maintained and replaced in a timely manner, or it stops functioning. Once that point is reached, economic activity becomes constrained not just by the availability of transportation fuels, but also by the availability of serviceable equipment. At some point the economy shrinks so much as to invalidate the financial assumptions on which it is based, making it impossible to continue importing oil on credit. Once that point is reached, the amount of transportation fuels available is no longer limited just by the availability of oil, but also constrained by the inability to finance oil imports.

The initial shortage of transportation fuels need not be large in order to trigger this entire cascade of events, because even a small shortage triggers a number of economically destructive feedback loops. A lot of fuel is wasted by idling in line at the few gas stations that remain open. More fuel is wasted by topping off -- keeping the tank as full as possible, not knowing when and where you will be able to fill it again. Even more fuel disappears from the market because people are hoarding it in jerrycans and improvised containers. As the shortages drag on and spread, fuel is hoarded, and a black market for it develops: fuel diverted from official delivery channels and siphoned from gas tanks becomes available on the black market at inflated prices. And so the effect of even a minor initial shortage can easily snowball into an economic disruption sufficient to push the economy over physical and financial thresholds and toward collapse.

If at this point you are starting to feel despondent, then -- I am sorry to have to say this, but you must be a lightweight, because there is more -- lots more to consider. Peak Oil's Rosy Scenario may look pretty, but even a rose has its thorns. And there are a number of other issues which need to be considered and taken into account within a single, integrated view.

First, the rosy post-Peak Oil global production profile is based on reserve numbers which have been overstated. Much of the remaining oil is in the Middle East, in OPEC countries, and these countries overstated their reserves by various large amounts during OPEC's âquota warsâ back in the 1980s. While other OPEC members sheepishly cooked up bogus numbers that looked vaguely real, Saddam Hussein, who was always a bit of a showboat, rounded up Iraq's reserve numbers up to a nice round number: 100 billion barrels. And so OPEC reserves turn out to have been inflated by some large amount -- about a third at a minimum. Nor is OPEC unique in overstating their reserve numbers. Energy companies in the US play much the same game in order to please Wall Street. Set your bathroom slippers aside; to negotiate Peak Oil's downward slope you will need good mountaineering equipment.

Second, there is a phenomenon called Export Land Effect: oil-exporting countries, when their production starts to falter, have a strong tendency to cut exports before cutting into domestic consumption. To be sure, there are some countries that have surrendered their resource sovereignty to international energy companies and have lost control over their export policies. There are also some despotic regimes that starve their domestic consumers but to continue to earn the export revenue needed to prop up the regime. But most countries will only export their surplus production. This means that it will become impossible to buy oil internationally long before all the wells run dry, leaving oil importing countries out in the cold. Thus, if you live in an oil-importing country and thought you could negotiate the downward slope of Peak Oil in your hiking boots, put them aside. You will need a parachute.

Third, although total quantities of oil produced throughout the world were
increasing up until 2005, the amounts of oil-based products (gasoline,
diesel, etc.) delivered to their points of use peaked years
earlier, in terms of usable energy derived. This was because more and
more energy has been required to get a barrel of oil out of the ground and
to refine it. Supplies of available crude oil have tended to become harder
to extract, heavier, and more sulfur laden, plus the demand for more
gasoline (as opposed to distillates or bunker fuels) with less lead for
boosting octane add up to more energy being wasted. Energy
Returned on Energy Invested (EROEI) went from 100:1 at the dawn of the oil
age, when some strong-backed lads could dig you an oil well using picks
and shovels, to an average of 10:1, now that oil production requires deepwater platforms (that sometimes blow up and poison entire ecosystems), horizontal drilling and fracturing technology, secondary and tertiary recovery using water and nitrogen injection, oil/water separation plants, and all sorts of other technical complexities which consume more and more of the energy they produce. As EROEI decreases from 10:1 toward 1:1, the oil industry comes to resemble an obese but famished wet-nurse ravenously sucking her own breast at the crib of a starving infant. At some point it will no longer be economically possible to deliver diesel or gasoline to a gas station. When that point comes is not certain, but there are some indications that 3:1 is the minimum EROEI that the oil industry requires in order to sustain itself. The effect of decreasing EROEI is to make the gentle slope of the Rosy Scenario much steeper. The slope no longer looks like a mound of pebbles -- more like lava flowing into the sea and solidifying in a cloud of steam. There may be plenty of energy left, but much of it is going to go by the wayside, and you might not be able to get close enough to it to roast your marshmallows.

Fourth, we must consider the fact that our modern global oil industry is highly integrated. If you need a certain specialty part for your drilling operation, chances are it can be sourced from just one or two global companies. Chances are this company has some very important, highly technical operations in a country that just happens to be an oil importer. The significance of this becomes clear when one considers what happens to that company's operations once Export Land Effect becomes felt. Suppose you are a national oil company in an oil-rich nation that still has enough oil left for domestic consumption, although it was recently forced to fire all of its international customers. Your oil fields are huge but mature, and you can only keep them in production by continuously drilling new horizontal wells just above the ever-rising water cut and maintaining well pressure by injecting seawater underneath. If you stop or even pause this activity, then your oil, at the wellhead, will quickly change in composition from slightly watery oil to slightly oily water, which you might as well just pump back underground. And now it turns out that the equipment you need to keep drilling horizontal wells comes from one of these unlucky countries that used to import your oil but now cannot, and the technicians who used to build your equipment have given up trying to find enough black-market gasoline to drive to work and are busy digging up their suburban backyards to grow potatoes. A short while later your drilling operations run out of spare parts, your oil production crashes, and most of your remaining reserves are left underground, contributing to an increasingly important reserve category: never-to-be-produced reserves.

When these four factors are considered together, it becomes difficult to imagine that global oil production could gently waft down from lofty heights in a graceful smooth and continuous curve spanning decades. Rather, the picture that presents itself is one of stepwise declines happening in more and more places, and eventually encompassing the entire planet. Whoever you are, and wherever you are, you are likely to experience this as a three-stage process:

Stage 1: You have your current level access to transportation fuels and services

Stage 2: You have severely limited access to transportation fuels and services

Stage 3: You have no access to transportation fuels and severely restricted transportation options

How long Stage 2 will last will vary from one place to another. Some places may go directly to Stage 3: gasoline tankers stop coming to your town, all the local gas stations close, and that is that. In other places, a thriving black market may give you some access to gasoline for a few years longer, at prices that will allow some uses, such as running an electrical generator at an emergency center. But your ability to successfully cope with Stage 2, and to survive Stage 3, will be determined largely by the changes and preparations you are able to make during Stage 1.

It should be expected that the vast majority of people will have done nothing to prepare, remaining quite unaware of the fact that this is something they should have been doing. Quite a few people can be expected to take a few small steps in a sensible direction, such as installing a wood stove, or insulating their home, or in a seemingly sensible but ultimately unhelpful direction, such as wasting their money on a new hybrid car or wasting their energies on trying to form a new political party or to lobby one of the existing ones. Some will buy a homestead, equip it for life off the grid, start growing all their own food (perhaps transporting their perishable surplus to a nearby farmer's market by cargo bicycle or by boat), and home-school their children, putting an emphasis on the classics and on agriculture, animal husbandry and other perennially useful knowledge. Some will flee to a place where transportation fuels are scarce already, and where a moped is considered a labor-saving device -- for your donkey or camel.

Unfortunately, it is hard to foresee which changes and adaptations will succeed and which will fail, because so much depends on the circumstances, which are sure to be unpredictable and vary from place to place, and on the person or persons involved: the uncertainty is just too great. But there is one thing of which we can be quite sure: that Peak Oil's Rosy Scenario, which projects a long and gradual global oil production decline, is bunk. Knowing this fact should impart a sense of urgency. Whether we use that sense of urgency foolishly or wisely is up to us, and our success may be a matter of luck, but having a sense of urgency is not at all bad. If we wish to prepare, we most likely have a few months, we may have a few years, but we certainly do not have a few decades. Let those who would have you believe otherwise first consider the issues I have raised in this article.

* * * * *

This article is exclusively on CultureChange.org for two months. It cannot be republished until November 1, 2010, and then so only with attribution, notification, and a link to the full article on Culture Change or ClubOrlov. Meanwhile, citation of up to 50 words is permitted. Dmitry Orlov has had many articles on Culture Change which can be republished with attribution and notification. His website iscluborlov.blogspot.com

Further Reading:

Petrocollapse's L-shaped post-peak curve is explained in contrast with the Hubbert Curve and John Michael Greer's stair-step post-peak decline in Our Post-Peak Oil Future, with three simple graphs, by Baylocalize.org, created by Aaron Lehmer and Jan Lundberg in September 2009.

Most of the people I know, eat food. This is why I think that the greatest threat to humanity is hunger. Climate change, economic collapse, species extinction and peak oil all threaten to exacerbate this threat. Wouldn't it be great if there was a cheap and easy way for each individual to increase their food growing capability while reducing their contribution to climate change, world hunger, economic collapse, species extinction and peak oil?

Fortunately such a process exists. It appears that there are a number of essential plant and animal nutrients that were previously unknown to science. When added to the soil, they double plant growth over a few years time, while increasing drought & freeze tolerance. They also improve the taste and nutrition of the plants. See:

Hunger is a threat because global warming will force us to significantly change our food growing areas, economic collapse will prevent more people from being able to afford good food, peak oil will force us to grow more food locally or starve and species extinction will create holes in the web of life that feeds us. Growing inches of new topsoil and doubling plant production in a couple years will help all species that eat food. It will also sequester more carbon.

Anyone with access to fire and sea water can concentrate these minerals from the sea. If you have access to magnets and plumbing parts you can concentrate them from the air or fresh water using open-source methods. If everyone can make it, no one can stop it.

I want to include a bit about my environmental work. Since 1969 I have been gardening organically. I started super-insulating my current eastern Oregon house in 1983 and can now heat it using one cord of wood per year. I currently live comfortably on about ten thousand dollars per year. More detail is at:

Just a minor correction to your saying that falling ERoEI of oil production will add to the predicted woes:

The concept of ERoEI is already built in to the Hubbert Curve. The reason it gets harder and harder to produce oil is because oil companies naturally choose to exploit the most profitable fields first - the "low-hanging fruit". The low-hanging fruits are those with high ERoEI, and the high-hanging fruits are those with low ERoEI.

If this were not the case, and all oil had the same ERoEI, the production curve would follow an exponential curve (mirroring economic growth in a perfect capitalist world) followed by a cliff-like crash.

Nature will sort things out - one way or the other, eventually - maybe sooner than later. If the human species survives, our descendants won't be living, or looking much like the lucky comfortable of our current era. I imagine most 'civilized' folks of today would call the population contraction generation(s) savages. If and when humans manage to achieve a sustainable re-balance with the Earth... it will be with much smaller populations. The tribes of the 7th generation will be somewhat rare and difficult to find. If we survive... I have two messages for them: "Glad we're still here. And, uh, sorry for depleting and screwing up the planet, we weren't very smart."

Have you reconsidered global warming after climategate? Interesting piece from one of the main skeptics: http://www.telegraph.co.uk/comment/columnists/christopherbooker/5067351/Rise-of-sea-levels-is-the-greatest-lie-ever-told.html#disqus_thread

Ormus is an interesting phenomenon. The only reason that I pay any attention is Jim Marrs, who has some insightful talks about it available via YouTube. However, snake oil salesmen have arrived (see above). If you want a real laugh, search for the video of the twerp duct-taping refrigerator magnets to a blender. Not unlike pyramid power from the 1970s. As to regenerating a cat's tail, someone should inform PETA or the SPCA. So easily faked, but that would mean that the after pics are really before... And someone cut that cat's tail off! Or Photoshopped it. Nonetheless, there is something to ormus. But, what?

I'm not as pessimistic as he is. The point of the Peak Oil hypothesis is not that the world will physically run out of oil. The point is that the world has already run out of cheap oil. At the moment there's ample oil to be had at $80/bbl. In say five years, you'll need say $120 to balance supply and demand. The problem is, as we saw in '06/'07, the economy doesn't do very well with oil at that price. So I'd summarize by saying that oil prices are going to constrain economic growth for the forseeable future, until we come up with an alternative. That alternative has to be alternate energy sources - and that's where our brilliant think tanks and entrepreneurs with any foresight at all should be looking and working.

Talking about oil price/bbl in US dollars is meaningless unless you use dollars standardised to a particular year. Obama dollars in 2015 will not have the same value as Obama dollars in 2010.

Craig Venter plans to put the petrochemical companies out of business, anyway, so Peak Oil may come about from that quarter.

To get the Hubbert curve to work properly for the US you not only need to drop Alaska, but you should also drop the Gulf of Mexico (Obama has already done that essentially) and Shale resources. Hubbert-followers often forget about the big spill off Santa Barbara that spurred a storm of regulations that had an immediate impact on US oil exploration and development. The date? 1969. Just about the time of the Hubbert Peak.

OPEC states are moving to nuclear energy in a slow avalanche, to provide domestic power. They don't have the bevy of trial lawyers and neo-luddites to struggle against to get a power plant built.

I must unfortunately, mention one more factor which supports Mr. Orlov's typically cheery scenarios, that is, the oil price feedback effect.

One immediate knock on effect of increased oil prices is the increased price of everything else as it works itself through the value chain. In short, everything gets more expensive, including the price of extracting, refining and distributing oil-based products.

Why is this important? Because it alone insures that oil depletion *effects* will occur much more rapidly than the actual depletion. Higher oil prices feed on themselves, starting to go up slowly at first, then increasing with remarkable rapidity until the economy can no longer support the process of using oil as fuel, and collapses.

Of course, economic collapse has its own effects. Suddenly oil demand increases to nearly zero. Assuming that there is enough working oil infrastructure left to do so, the oil will then once again start flowing, for a while, until the process repeats itself, possibly several more times as the oil economy writhes in its death roes.

Don't you like the movie about the rich guy trying to exchange all his gold bullion for a seat on the last rocket out? Scenario been played a million times before even the rich man going through the eye of the needle tale. What secrecy waits behind closed doors? The economic "slowdown" is just a replay of Mike Mulligan's best seller "How we Broke Orange County" and his follow up "How I made Something out of Nothing". What do we learn as the massive corporate greed machine makes toothpaste cost $10 a tube and makes you believe if you don't get a "shot" of this you'll die? A 18 year old community college baseball just signed a contract ($15,000,000) to play(hasn't been to a park yet, only to the bank) and will make more money per hour in one day BEFORE lunch than a couple working minimum wage does combined does in a YEAR. Food for thought or consumption. You can only extract so much from anything (oil) before it's gone (economy). I live in a paradise setting on the Pacific Ocean. My laundry costs (I do pay for it to be done) is under $3.00 per month. Heat and A/C=$0, plant anything and it grows. It doesn't take much to live if you live right. Like everything else, EVERYONE won't fit in this paradise, and only the 1st to arrive will be able to or like oil, it's price/availability will be prohibited for those that are too late. http://www.playaroca.comhttp://www.nicaliving.com/node/17414http://bit.ly/4Ujkkdavid cardin on facebook

The most horrifying and mystifying aspect of this for me is that maybe only about 1 out of 100 people seem to even have thought about this. Virtually everyone, from the doctor to the politician to the next door neighbor, believes that we're in a recovery, albeit a bit "slower than expected". If my political party could just get control, then everything will get back on track. "They" will come up with something to get the SUVs running again...

Humans do not respond to a crisis until they are well into it. We are well into our crisis, which fossil fuel extraction has exacerbated but not caused. I expect that, Hubbert aside, there will be a cliff-like end to oil extraction because there will be a cliff-like end to human population growth. This will be the real driving force behind an oil extraction or usage collapse. The human population upward curve dropping straight down will be partially induced by the end of growth in free energy supply, and that will then influence the further drop in oil production since there will no longer be the technological/cultural means to extract and transport it.

As the world keeps evolving like there is no tomorrow to worry about I wonder greatly about the so called population drop, especially a "cliffer" as noted above. A recent article from the World Food Organization puts the number of "hungry" at nearly a BILLION people. It's the WORST it has been in "DECADES". This statement is the crux of the problem, it has happened before with these numbers and my guess most of those now starving are related to those who were starving before. They still mass duplicate themselves into the cyclic starvation pattern, very little drop off on reducing the population that truly needs reducing. The only way for it to drop off significantly is for them all to die or tie their tubes (that sounds harsh, it is, but how else would do it?). Lack of food, oil, shelter, water, sewage, etc. has not stopped the over populated "super have-nots" continuing to breed and consume beyond the immediate solving of any problem. With the limited resources of oil to drive this "earth" machine we've generated, how do you think we are going to deal with the BILLION of non-productive consumers, it still takes energy we won't or don't have. Per normal, we as a species continue to ignore the massive problems we have created and continue to create. Corporate "World", not just America anymore, has made the motto: Of the Corporation, By the Corporation and FOR the Corporation, it only exists to sustain itself, it is it's own entity, has no respect for Man Kind, its written in its charter that way and Thomas Jefferson warned us. The "Haves" are TOO well insulated from Reality of how WE as a species are going to continue. I live in the 2nd poorest country in the western hemisphere, Nicaragua (Haiti being #1), but there is abundance here, no over population, a paradise untapped by ignorance and corruption (Corporate greed camouflaged by governmental propaganda). But real systems of education, health and infrastructure could turn this POOR nation into the paradise its destined to be. see: http://www.travelpod.com/forum...pic=121111http://www.playaroca.comhttp://bit.ly/4Ujkk

I am afraid that there are many other feedback loops other than the ones you have accurately named. Although conventional oil is certainly at its peak, petrochemists have certainly not run out of tricks. Nazi germany was "cracking" coal for its liquid fuel needs during WWII, and South Africa does it today. Add in our beloved tar sands, and we should see not a precipitous drop, but a long, drawn out period of high energy prices and economic stagnation. No other energy resource (barring the long-awaited breakthrough in fusion) will beat the EROI of even this "senescent" petrol economy, although a cocktail of site-selected resources is likely to emerge.

The less-dramatic, but equally ugly truth is that the future is less likely to be the complete collapse you dramatically predict, and more like Naomi Klein's Disaster Capitalism scenario - security & energy for the wealthy and well connected while everyone else deals with crumbling infrastructure, high prices for non-local goods, and probably a fair bit of violence and mayhem. Certainly efforts to localize economies and relearn the skills of preindustrial humanity will be valuable, but I think that the Armageddon scenario is really a bit simplistic - it is satisfying in a way that smacks of cultural mythology instead of clear forecasting.

That said I do very much enjoy reading all that you write. Rock on. B

p.s. you wankers who are using the comment area to sell you snake oil are just another breed of parasite.

Ben's scenario is not quite so bleak. It implies that despite higher prices, we can keep hobbling along for awhile. This would hypothetically buy some time for alternative energies to gain ground. Nobody can argue that solar, wind and geothermal contribute much right now, but they do seem to be heading towards an exponential growth trajectory. Historically, this exponential growth trajectory for certain technologies (e.g, computer chips)has been amazingly resilient to politicians, recessions, and virtually everything else. It might be that the imminent financial collapse and the carnage of peak oil aren't what take us down, but rather the fact that 40% of the phytoplankton seems now to be missing from the oceans and that global warming will be more catastrophic than is generally predicted.

It is correct what Dmitry says. The reason for the US oil production decline after the peak in the 60's and 70's is that the very much cheaper OPEC-oil alternative was at hand. An alternative scenario (without the cheap OPEC-alternative) is given by Germany during WWII: Due to the lack of oil-imports and due to a tremendous need for oil, the Fischer-Tropsch process was facilitated in order to produce synthetic fuel from coal (coal to liquid - CTL). Today, the CTL-production process is by about a factor two more expensive than the "low hanging fruit"-oil we consume today at 80US$ per barrel. This means that we will have to wait for a doubling of oil prices in real terms until new fuel production processes will be installed. Until then society will have to adapt to increasing energy prices which will entail significant inflation, but there will definitely not be a global collapse for the time coal is available. With todays energy consumption rates there are about 250-300 years left to consume the coal fields known so far. Extrapolating the US oil production from the 70s to todays global energy production straight forward leads into the wrong direction.

Great article, if depressing, and I guess that someone who saw the USSR implode knows a thing or two about the end of empire. But - what solution is offered? You seem to think that it is a waste of time growing veggies, riding a bike or using electric cars. At least you do not make a plea for nuclear power. At the same time, you ignore renewable energy almost completely. To my addled mind, we would do well to use the relatively cheap energy supplies that we have now to exploit renewable energy that needs infrastructure - wave, wind, geothermal - and build lottsa lottsa solar panels. Certainly the down side of the curve won't be smooth, and it will be a very bumpy ride, but I would guess that we will just see energy get more expensive, travel will be increasingly restricted to the better off, and the infrastructure will crumble. But the last part sounds like the USA right now. :-|

All well and good, but -- and I'm sure you've heard this many times -- substitute technologies will emerge. Markets are imperfect, but across the world stage, innovators like Shai Agassi (of "A Better Place") and others rush in responding to market signals.

What I'm much more concerned about is what's below. Whether linked to the BP oil spill and dispersants or not (in my mind, probably not so much -- it's probably just more a symptom of global warming and icecaps melting), this could be our Climate Armageddon, which would totally eclipse anything like Peak Oil...

Orlov's article inspired me to try and to make a correction to an example "rosy scenario," by at least considering the export-land model as applied to the USA's oil consumption in the years to come. My analysis is here: http://crash-watcher.blogspot....cline.html and here: http://crash-watcher.blogspot....inued.html. My analysis, though flawed, helps to illustrate the point that certain societal disruption events associated with declining oil availability could be much closer than some might expect.

I see the twin perils of of peak oil and climate change (like the ugly sisters in Cinderella) as essentially just twins from the same womb. Both have the same root causes, namely those of a human world where a grab and stash mentality was championed as the right way, and of course those in charge of wealth made sure their descendants stayed on top by rigging the economic systems to keep everyone else in varying states of indebtedness. A very neat and devilish monopoly game where they hold all the "get out of jail free" cards for, and more. But now folks the time is running out for this game and as we all know billions of newly arrived players have yet to play it at all, so what next? I say scrap the economic system and start again with one that is founded on greater equality and above all, complete accountability. With this in place all players will be able to see the truth clearly and work together to avoid the icebergs ahead. The "ignore it and see what happens! scenario was played out beautifully by the captain and bridge crew of the RMS Titanic, and is a perfect example of the penalty costs that affect the ordinary masses when a few powerful fools decide to ignore obvious dangers ahead that affect all.

I was introduced to the idea of Peak Oil since 2000. Transportation fuels aside, hydrocarbons go a lot further than the mere act of getting on a bus. While the scenario described is certainly gloomy, it does require the premise you've stated, namely that an importing economy can only go so far if their debt loads and currency are seemingly headed down the shitter. Of course the US would seem to fit this bill at the moment quite nicely..however, if we get back to a few things we already seem to know, like for instance, the US invaded Iraq for the most noble of reasons, pinch ourselves and wake up to the real agenda over there, then perhaps the hegemony sort of makes sense. Consider the idea that the US can print endless amounts of currency because they know it's all monopoly money anyway. Should the US dollar one day reach a value of say ten cents, and America owes me ten dollars, I'm sure the US Treasury would be happy to slide me a tenner. To add a little salt to my wound, I'm sure they would sell me a barrel for a thousand times that.

I wonder what the Dmitry would suggest as sketches of "things to do" for a single father of two young children who isn't poor but is not far above the poverty line here in the US?

One thing that I personally have felt drawn towards is "transformational models" which is simply the best piece of jargon I've come up with so far to deal with the problem of people. When things begin to break down, most will engage in the fear reactions and lose their sensibility. I've always imagined that when the collapse begins, and assuming that there is at least some period of weeks or months of clear warning of rock bottom, there will be a direct need for "leadership" capable individuals who can inspire peace and calm in the middle of chaos. Not miracle workers, but people committed to the highest good in the face of historic collapse.

What utility is there in knowing models for group/community engagement that can foster breakthrough decisions? There are limited resources in a smallish town, there are many good-natured people there who do not wish to resort to dog-eat-dog survivalism. Just simply getting such optimistic/positive persons into a room will not guarantee any good outcome, but from what I've discovered about these transformational models is that amazing breakthroughs, at the practical and metaphysical level, can occur.

While it is likely that the exploration of these models at the present time will not be in the context of, "What the fuck do we do NOW!?!?!?" it is my own understanding that to have a working knowledge of these processes is a tool in the leadership toolbox when all Hell starts to break loose.

Stocking up on supplies is out of many people's leagues, as is heading off to the homestead to homeschool the children and raise up some resilient human beings (a constant dream for me personally), so what I'm just breaching the surface of in this comment is that no matter what happens, it doesn't seem like anything is lost by having a knowledge of getting people to work together intelligently. I look at the passions of the human being as the area where these processes can come into play- by diverting the fear response into a sense of practicality and community, there is the chance that less barbarism will ensue.

Curbing the effects of barbarism, as well as holding onto as much of good culture as possible (such as classical education, study of virtue, and animal husbandry), are two areas that I feel I can hold some ground on in the event of collapse.

A collapse situation seems to mean that improvisation will be the rule of the day, and I apply this to my thinking on this matter- knowing such transformation group models is the blueprint for crafting situation-specific group processes which allow the people involved to begin forming a sense of a group ego in a time of extreme circumstances.

Wow, Dmitry, how did you gain such mastery of English? Few persons native to the language can swing it around so deftly. In reading your article, I laughed aloud at your brilliant turn of phrase. Of course, your message is chilling, yet I was delighted at the same time. I truly wish that I could witness the resonance of your thoughts in Russian!

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but now that conventional world oil production peaked in 2005, and all liquids world production peaked in 2008, everyone is ready to concede that there are serious problems with growing the global oil supply

...and the comments on the show were filled with should and must and can't and other verbs of... withdrawal and inaction. I'm glad to see this article with some simple, clear and coherent content. It can seem lonely out here when even the Feinbergs among us get into speculating about how to save what may already be over. The past does not require saving and the future does not need to be prevented.

Thanks for the article, Dmitry (and any re-publishers). I'd be interested in conversing with you, perhaps on Skype.

As oil becomes more scarce, the price will go up. People will start to drive more efficient cars, like plug in hybrids that can be charged overnight in the owner's garage using a regular wall outlet. For longer trips, biodiesel or LNG, both of which are plentiful in the U.S. This will lower demand right along with supply. There is enough surplus capacity at night to "re-fuel" 200 million cars without building a single new power plant. Who cares if the local gas station closes!? "Peak Oil" will be a non-event. Society will make a smooth transition to Chevrolet Volt-type vehicles, and we will continue our way of life. I am sick of all the negativity, which seems to come from Peak Oil types who are predominantly older white men.

Anyone who attempts to stop me from exercising my rights will be killed! This is my right, too.

I will not drive a clown car made in a furrin country, or worse, designed in a far off land for small foreigners and assembled by enslaved American factory workers. Even worse: A car designed in Germany and made in Mexico to keep American from even menial assembly work.

I would just as soon walk everywhere or ride my vintage Schwinn as ride in a tiny Clown Car.